Copyright Agency Annual Report 2018–19

ANNUAL REPORT 2018 –19 Annual Report 2018–19

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Copyright Agency

CONTENTS

Chair’s message .................................................. 2 Our board members ........................................... 3 Financial highlights ............................................. 4 CEO’s message ................................................... 5 Highlights of 2018―2019 ................................... 6 Serving our members ........................................ 8 Innovation for education .................................. 14 Licensing at work ............................................... 16 Supporting Australian creativity ..................... 18 Awards and sponsorship ............................... 20 Directors’ report and financial report .......... 22 Auditor’s independence declaration ............ 30 Statement of comprehensive income ........... 31 Statement of financial position ...................... 32 Statement of changes in accumulated funds ....................................... 33 Statement of cash flows .................................. 34 Notes to financial statements ........................ 35 Directors’ declaration ....................................... 48 Independent auditor's report ......................... 49

Front cover: Model Domanique Hutchins wearing a piece from fashion designer Lisa Gorman's Mangkaja collection at the Museum of Contemporary Art Australia’s exhibition ‘The National 2019: New Australian Art’ featuring artwork of Daisy Jupulija, Sonia Kurarra, Mrs Rawlins and Ms Uhl exhibiting as a group, installation view, 2019, © the artists/Copyright Agency. Photo: Edwina Hollick. © 2019 Copyright Agency Members and licensees may use text. Permission should be sought from the Copyright Agency for the use of images. Please be advised that this publication may include the names and images of people who have passed away.

Printed by First Nations printer Spirit Creative Agency.

Annual Report 2018–19

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CHAIR’S MESSAGE Ki

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I have worked for my whole life in organisations dedicated to creating Australian content – across music, film, television, media and books – and to finding (and developing) audiences. While deeply rewarding, these are all very tough businesses. People who create stories, expose themselves in a way that few others do.

To work, these businesses require extraordinary sales and promotional skills to attract audiences. This is particularly the case as Australia is a small market and digital technologies now mean people have a staggering array of choices.

I am pleased to report that we have had a satisfactory year in supporting Australia’s publishers, writers and visual artists in their work. We have distributed close to $120 million for the use of our members' work, advocated for policy settings that will modernise the copyright regime, and initiated some necessary legal action to protect members' rights and payments.

This legal action is fundamental to setting the future licensing framework for core agreements – including with universities, who sadly, refuse to pay a fair rate for the use of copyright material.

The task of sustaining Australian storytelling was made infinitely more difficult by a series of missteps in the earlier part of this century: media companies gave their content away for free; a whole generation of people assumed you could steal content without any adverse effect on its production; some of the now most powerful digital companies in the world built their businesses on the content produced by others; and Australian policy makers were very slow to understand the implications of all of this.

Additionally, we have made submissions to the ACCC’s Digital Platforms Inquiry which is seeking to ensure a revenue flow from technology companies, who use media content, to media businesses that support original journalism that’s clearly in the public interest. That digital platforms should pay for the use of news media content is consistent with the approach that the European Union adopted in its recently passed copyright directive.

At Article 15 is the provision of a ‘publishers' right’ to better ensure that publishers can negotiate a licensing arrangement with digital platforms.

I am pleased to report that in recent times we have seen some positive changes on each of these fronts. Some media companies have been figuring out digital models that sustain journalism. Product innovation, education and legal actions have meant a huge increase in the consumption of legally available content. And the world is increasingly wise to the idea that big digital platforms are not altruistic start-ups but powerful global companies whose rise has come at a cost to content producers.

One of the central elements to sustaining Australian storytelling is an effective copyright regime. It sets the framework that rewards and respects creators.

It ensures creators have an incentive to keep creating and it encourages innovation. At our core, the Copyright Agency is dedicated to protecting this important principle.

Our members are at the forefront of creativity, Australian storytelling and the experience of digital transformation.

Publishers, writers and artists know exactly how difficult, how rewarding and how vital it is to tell these stories and to find readers, viewers, listeners and audiences.

To connect. To entertain. To inform. To challenge. To make a difference. They do it every day.

It is an honour to Chair an organisation that is dedicated to supporting such talent.

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Copyright Agency

The ACCC report favours a code of conduct approach, rather than a licensing approach. We believe that if there is to be a Code of Conduct it should be administered by the ACCC, and have made submissions to this effect.

The Government has embraced the final report and is now considering submissions from multiple parties before it develops regulatory reforms.

I’d like to express my thanks to our Board members for their commitment and dedication to the agency. I’d also like to thank CEO Adam Suckling, his team and the rest of the agency’s committed employees who have all worked to deliver the results outlined in this report.

While there is much to do and we must always move forward, there are good things to celebrate in this report, which I commend to you.

With every best wish,

Kim Williams

OUR BOARD MEMBERS

David Barnett

Anthony Bertini

Jane Curry

APA-appointed Director

Independent Director

Member-elected Publisher Director

Jason Eades

Adele Ferguson

Dr Kate Harrison

Helen O’Neill

Independent Director

Member-elected Author Director

Independent Director

ASA-appointed Director

Chris Pash

Lucy Russell

Dr Oliver Watts

ASA-appointed Director

APA-appointed Director

Member-elected Artist Director

Kim Williams, David Barnett, Anthony Bertini, Helen O'Neill and Lucy Russell photos: Richard Birch. Chris Pash and Oliver Watts photos: Caitlin Hicks. Other photos supplied.

Annual Report 2018–19

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FINANCIAL HIGHLIGHTS

$151M

$21M

Copyright Agency

$116M

$130M

EXPENSES

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PAID TO MEMBERS

NET INCOME

REVENUE

COST RATIO

13.8%

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CEO’S MESSAGE Adam

I believe that the Copyright Agency’s job is to stand up for you, our members, in a world that has been profoundly transformed by digital technology. We did this in FY19 by coming to contemporary licensing agreements, undertaking necessary legal actions to establish the value of digital content under our licences, investing in new 21st century digital systems and products, and advocating for modern policy settings in Canberra which support creators.

Over the year, we entered into agreements with a vast number of licensees including almost every school in Australia (covering 3.8m students), hundreds of private and not-for-profit colleges, the Commonwealth and every State and Territory Australian government bar one, hundreds of Australian businesses, and local councils across the country. Our licences allow these organisations to effectively conduct their business by providing access to an absolutely huge amount of high-quality content.

Over FY19, our revenue was around $150m and we paid-out close to $120m to publishers, authors and visual artists for the use of their work. This money makes a significant contribution to sustaining Australian storytelling. I am, for instance, regularly told by Australian publishers and authors that the money they are paid by the Copyright Agency, for the use of their works by large institutions, is critically important to sustaining their operations or practice.

In order to sustain a fair return for the use of creators’ content, we are taking legal action against some licensees, including the university sector. As I have outlined previously, this dispute arises in many ways because of the profound changes driven by digital technology. We believe digital technology facilitates much greater use of valuable copyright material.

We also believe it allows for the more effective measurement of the use of this material, to allow payments to members.

So, the case represents a critical investment in the future. It will set the framework for copyright licensing for our key licences for many years to come.

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projects – it’s always risky to highlight just one!

But I would like to applaud First Nations author Melissa Lucashenko, whose work Too Much Lip, written during her Cultural Fund Author Fellowship year, won this year’s prestigious Miles Franklin Literary Award.

Over the year, we also continued to invest in new systems and processes, that are critically important to enabling us to efficiently pay members, and to improve the services we offer. The project includes upgrades to our finance system, our customer relationship management system, our works, rights and shares database and our member portal. In short, it covers all our major systems, and involves deploying new 21st century, cloud-based technology.

We have also continued to advocate in Canberra for fair copyright policy settings that respect the rights of creators to set the terms of use of their material. We have worked, I am happy to report, very effectively with the Australian Society of Authors and the Australian Publishers Association on a number of great initiatives that highlight to policymakers the importance of copyright in sustaining Australian storytelling.

Our visual artist members too have been creating a buzz. Five First Nations artists from Mangkaja Arts Resource Agency in WA’s Great Sandy Desert teamed up with Australian fashion house Gorman to produce a fashion collection worthy of being hung in a gallery.

My sincere thanks to the Copyright Agency’s Board members for their hard work and guidance in 2018–19, and to all our executive team and employees whose expertise and commitment is so important to ensuring we deliver for our members every year.

All the best,

Adam Suckling

Photo: Hugh Hamilton

In addition to these payments, through our Cultural Fund, we made project grants to a large number of writers, publishers, visual artists and cultural organisations. We supported many outstanding Annual Report 2018–19

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HIGHLIGHTS OF 2018–2019 SPONSORSHIP

OF EDUCATIONAL PUBLISHING AWARDS, AUSTRALIAN BOOK INDUSTRY AWARDS AND WALKLEY ARTS JOURNALISM AWARDS

$116M PAID TO MEMBERS

NEW 4–YEAR SCHOOLS LICENCE AGREED

100+

FLEX FOR LIBRARIANS ROLLED OUT TO PRIVATE HIGHER EDUCATION CUSTOMERS

NEW BUSINESS LICENCES

ALMOST

80 NEW 20%

EDUCATION LICENCES

PROTECTING MEMBERS' RIGHTS IN THE COPYRIGHT TRIBUNAL

GROWTH IN VISUAL ARTS LICENSING INVESTMENT IN NEW SYSTEMS TO SUPPORT MEMBERS 8

Copyright Agency

FIRST

$15K

READING AUSTRALIA FELLOWSHIP AWARDED FIRST FELLOWSHIPS FOR NON-FICTION WRITING AND A VISUAL ARTIST AWARDED ALMOST

$700,000

IN RESALE ROYALTIES PAID TO 352 ARTISTS AND BENEFICIARIES

REFRESHED

MILES FRANKLIN LITERARY AWARD SHORTLIST EVENT

$1.5m+ IN CULTURAL FUND GRANTS SUPPORT AUSTRALIA’S WRITING, PUBLISHING AND ARTS SECTORS

MAJOR SUPPORT FOR AUSTRALIAN READING HOUR JUSTINE YOUSSEF WINS 10TH JOHN FRIES AWARD

Top: Visual Artist Fellow Karla Dickens. Photo: Mick Richards. Centre: Miles Franklin Literary Award shortlisted authors with Adam Suckling and Kim Williams. Photo: Belinda Rolland. Bottom: Justine Youssef. Photo: Jessica Maurer.

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SERVING OUR MEMBERS

The Copyright Agency’s purpose is driven by four core pillars: to license effectively, operate efficiently, advocate for fair policy settings and – the pillar which all of the others work to achieve – to serve our more than 40,000 members from the publishing, media, education, arts and surveying sectors.

$116

HIGHLIGHTS In 2018–19, we served our members in a number of important ways. We made copyright licensing revenue payments of $116m to members, negotiated a new fouryear licence agreement with the schools’ sector, launched and continued legal actions in the Copyright Tribunal to stand up for members’ rights, and continued to advocate for fair policy settings.

We sold over 100 licences to new business customers and almost 80 to new private education customers. We also continued to invest in major system upgrades to ensure operational efficiencies are optimised in the future.

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Copyright Agency

MILLION PAID TO MEMBERS

40

THOUSAND MEMBERS

75

GRANTS TO CREATORS

100+

NEW BUSINESS LICENCES

Drive licensing and cost efficiencies Annual payments to members The Copyright Agency closed off the financial Year 2018–19 making distributions to members of $116 million. The money, which comes from licence fees paid by the education, government and commercial sectors for using valuable copyright material, is paid across the creative economy – to publishers, authors, academics and teachers, plus journalists and media publishers, surveyors and visual artists.

LearningField Following a detailed strategic review, Copyright Agency and the LearningField publishers made the decision to withdraw the LearningField service from the market at the end of the calendar year 2019. This is because the investment required to further grow the business, and risks associated with this investment, outweighed the benefits to our members, in what is an increasingly competitive market. copyright.com.au

Schools agreement

Investing for members

WA Surveyors

The key terms for a new copyright remuneration arrangement for the next four years were agreed with the schools’ sector. This agreement covers the use of a huge amount of material used by 3.88 million students across Australia.

In 2016, we began a multi-year Business Transformation project to modernise the agency’s numerous technological systems, including finance, customer relationship management (CRM), member interface and data around works, rights and shares.

The Copyright Agency signed a deed with the Western Australian Government in early 2019 for almost $1m in retrospective copyright royalties for selling local surveyors’ plans (between 2005 and 2017).

The agreement provides certainty over payments for the four-year term; commits us to working together on a new measurement system to capture usage; and allows either party to go to the Copyright Tribunal if we cannot agree on the most reliable ways to measure usage.

With Phase 1 – to upgrade the finance system and introduce CRM system Salesforce – delivered in early 2018, we embarked on Phase 2, which includes introducing a simplified payments model; greater transparency on payments; and a contemporary self-service member portal. These changes are all being made within a framework of working more efficiently to ensure we manage our costs over time. We are consulting and testing the portal with members as the work progresses.

As a result, the agency began recruiting Western Australian surveyors and the payment was made in mid-August 2019 to 56 surveying firms, representing more than 80 individuals.

The Western Australian Deed is the fifth of its kind, after New South Wales, Queensland, South Australia and Victoria.

Top left: Shutterstock. Centre: Michelle Kelly's artwork Fairy Ring (detail) was made possible through a Cultural Fund grant. Photo: Grant Hancock. Right: Chicksphoto.

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SERVING OUR MEMBERS

Direct support and advocacy Copyright Agency manages the copyright licences for text and imagery, which has a natural alignment to the work of educational, trade and media publishers, authors, journalists, photographers and artists. Apart from providing income to them, we support our members in a number of important ways.

Advocating for fair copyright policies Copyright Agency works with key stakeholders, such as the Australian Publishers Association and Australian Society of Authors, to engage with politicians in Canberra on the importance of these sectors to Australian education and to our cultural life. We advocate in favour of policies that respect creators by allowing them to set the terms of use of their material, while encouraging investment and innovation.

The Parliamentary Friends of Books and Writing, which had its first anniversary in September 2018, comes together regularly, with our support, to engage politicians on the issues confronting the sector. This group joins with the Australian Library and Information Association and Australian Booksellers Association to launch Australian Reading Hour in September each year, which Copyright Agency helps fund and actively promotes.

ACCC Digital Platforms Inquiry Copyright Agency made a submission to the ACCC’s landmark inquiry into digital platforms in support of its media publishing members. The submission advocated for licensing arrangements with large digital platforms that aggregate media content to provide fairer compensation than currently exists.

Australian Book Industry Awards Copyright Agency sponsors the General Non-Fiction Book of the Year Award at this annual prestigious celebration of books, writing, bookselling and publishing.

Behrouz Boochani won the award for his journal-memoir, tapped out on a mobile phone by text message from Manus Island, No Friend But the Mountains: Writing from Manus Prison (Pan Macmillan Australia), translated from the Farsi by Omid Tofighian.

Educational Publishing Awards Australia The Copyright Agency is the major sponsor of the awards which recognise excellence in educational publishing in 20 categories across primary, secondary and tertiary education.

We also sponsor two major awards, the Primary and Secondary Publisher of the Year, which are voted for by educators.

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Member Diana Rigg, who founded West Australian publisher PLD, won the Primary Publisher of the Year in both 2018 and 2019. See full story page 16.

Similarly, Oxford University Press, won the Secondary Publisher of the Year in both 2018 and 2019.

Publisher Fellowship 2019 In May 2019, the Copyright Agency’s Cultural Fund awarded a $15,000 Publisher Fellowship to Justin Ractliffe of Penguin Random House to research how publishers can gain greater consumer insights through digital data.

The Publisher Fellowship supports the pursuit of innovation and professional development from global experiences that can deliver benefits to the Australian publishing sector.

The 2018 Fellows, Spineless Wonders publisher Bronwyn Mehan and Monash University Publishing’s Nathan Hollier, spent time investigating what local publishers could learn from international business models in publishing in the United States and Asia.

Publisher Mentorships The Australian Publishers Association organised mentorships for six up-and-coming publishers in 2018–19, with funding from Copyright Agency’s Cultural Fund. It’s the third year of the program.

Of the six interns placed with publishers, five have subsequently been employed with their host companies, with the feedback from publishers and mentees of a rich and rewarding experience. Interns were involved in as many projects and experiences as possible – from manuscript submission processes, to editorial, sales, publicity, event management and author communication.

Inclusive Publishing Guides We provided funding to the Australian Inclusive Publishing Initiative, which aims to increase access to texts by vision-impaired people.

AIPI developed two guides for publishers, Inclusive Publishing in Australia and Making Content Accessible. The first encourages the creation of accessible digital books, while the second provides a simple summary of the copyright law governing access to material for people with a disability in Australia.

Top left: 2019 Publisher Fellow Justin Ractliffe with Copyright Agency CEO Adam Suckling. Photo: Dan O'Brien @ Secretly Exposed. Centre left: HarperCollins CEO James Kellow and author Trent Dalton at a Parliamentary Friends of Books and Writing event in Canberra. Photo: Irene Lorbergs. Top right: Affirm Press Publisher Coco McGrath (left) with intern Freya Horton Andrews. Photo supplied. Centre right: Author Behrouz Boochani won this year's Non-Fiction Book of the Year Award for No Friend But the Mountains: Writing from Manus Prison. Photo supplied.

Bottom right: Education Publishers of the Year: Diana Rigg of PLD (Primary), and OUP ANZ and Pacific MD Arthur Baker (Secondary). Photo: Lindsay Edwards.

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SERVING OUR MEMBERS

Standing up for rights Copyright Tribunal actions To protect members' interests, Copyright Agency is involved in three legal actions to set copyright rates, which will all be heard in 2020. These are with Universities Australia, which represents 39 universities; three media monitoring organisations (being heard together): Isentia, Meltwater and Streem; and the NSW Government.

Universities Australia We took legal action in November 2018 after a breakdown in commercial negotiations with Universities Australia for a new licensing agreement beginning in 2019.

JULY 2018 – JULY 2020

UA’s offer simply did not properly reflect the value of our members’ content to the sector which is fundamental to teaching at Australia’s 39 universities, with their 1.4 million students, 60,000 academics and 70,000 professional staff. Our licence enables universities to copy and communicate a vast range and amount of material, provides significant savings in time and costs, and adds substantial educational value.

In May 2019, the Copyright Tribunal determined that Universities Australia should continue to pay the previous licence fee of $32.5m per annum as an interim rate, with half to be paid to us to distribute. The remaining 50% will be held in an interest-bearing account until the case is finalised.

While it does mean that our members will receive less income over the course of the Tribunal case, the Tribunal’s order does provide certainty around payments throughout the proceedings. If the Tribunal ultimately rules that UA’s final rate should be higher than the interim rate it has set, there will be a back payment to members.

Media Monitoring Organisations In 2017, the Copyright Agency after consulting with CopyCo (representing the major media publishers) developed a new draft model for licensing content to Isentia, Meltwater and Streem. The model sought to provide both a fair return for the use of valuable content and a pricing methodology more appropriate for digital use and how the content is used by the MMOs. Regrettably, when taken to them for consultation, the three media monitoring organisations are contesting the draft model in the Copyright Tribunal.

The Tribunal has finalised the interim rates payable in each case. In the case of the two smaller companies, Meltwater and Streem, the Tribunal maintained the status quo, with allowance for an adjustment in the rate depending on the final outcome of the cases.

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Copyright Agency

In the case of Isentia, the Tribunal took a slightly different approach to its calculations, which will mean a reduction in payments to content owners. Previously, Isentia was paying a fixed minimum fee for use of copyright material, whereas under the Tribunal-set interim rate, Isentia’s fee is now largely variable.

NSW Government The Copyright Agency has taken the NSW Government to the Copyright Tribunal because of its refusal to pay a fair rate for six years for the use of copyright material.

NSW public servants copy and communicate an enormous amount of material covered by copyright and we believe that it should pay a fair rate for the use of this material.

Governance Code of Conduct The Copyright Agency and all other Australian collecting societies – APRA AMCOS, ASDACS, AWGACS, PPCA and Screenrights – have launched a new standalone website for the Code of Conduct for Copyright Collecting Societies.

The new site and amendments to the Code are both initiatives undertaken in response to a Government review which recommended: • increased clarity around the role of the Code • improved transparency around collecting societies’ operations, and

International copyright

• strengthened governance arrangements for collecting societies and the Code.

European Union Directive

Reconciliation Action Plan

The Directive on Copyright in the Digital Single Market came into force on June 7, 2019 after enormous campaigns for and against it mounted by tech companies and their opposites, the creative community.

In 2018, the Copyright Agency launched its second Reconciliation Action Plan. The 'Innovate' RAP, outlines Copyright Agency's commitment committing to specific activities and events that give us the opportunity to make our engagement more effective with the many Aboriginal and Torres Strait Islander creators in the arts and literary community.

The Directive aims to modernise European Union copyright law by taking into account the increasing digital and cross-border uses of protected content.

Its key goals are to protect press publications; reduce the “value gap” between the revenue made by internet platforms and by content creators; encourage collaboration between these two groups; and create copyright exceptions for text and data-mining.

Top right and centre: Shutterstock. Bottom right: Albert Namatjira's painting Hermannsburg, 1951 is on cover of the Copyright Agency's Reconciliation Action Plan © Namatjira Trust/Copyright Agency 2018.

Member States now have two years to implement the Directive into their own countries.

Copyright laws in Canada In 2018–19 the Canadian Government has been reviewing its copyright laws. Canadian authors and publishers have endured serious erosions to their livelihoods since 2012 as a result of copyright changes which led to uncompensated use of published work by the education sector.

The review has seen two reports delivered – the first, from the Standing Committee on Canadian Heritage, backed Canadian authors in their push to reform copyright laws.

The second, from the Standing Committee on Industry, Science and Technology, is inconsistent with the first report and less sympathetic to creators.

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INNOVATION FOR EDUCATION

We announced the first-ever Reading Australia Fellowship for a teacher of English and Literacy; our new cloud-based course compiler, Flex for Librarians, is being rolled out in colleges; and the online RightsPortal was upgraded to make licence renewal easier.

Reading Australia Fellowship

RightsPortal for Private Education Providers

Alex Wharton (pictured), from Carinya Christian School in Gunnedah, NSW, was awarded the Copyright Agency Cultural Fund’s first Reading Australia Fellowship for a Teacher of English and Literacy.

Copyright Agency introduced a new online service to help our licensed Private Education Providers to easily apply for and update their copyright licences.

More than 1000 PEPs used it to update their agreements in February and March 2019.

The Fellowship provides $15,000 for a career-enhancing research project which can be shared with other teachers to further the profession. Alex’s research project will explore best practice around teaching Indigenous literature in the classroom to develop a greater understanding of the issues, protocols and sensitivities involved.

Reading Australia added 22 new teacher resources during the year and newsletter subscribers have increased 20% to 16,500 per issue. readingaustralia.com.au

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rightsportal.com.au

Flex for Librarians The new cloud-based tool Flex was under development in 2018, and in 2019, multiple private colleges have begun using it to access a wide variety of high quality education material, and compile copyright-compliant course materials for their students.

National Library Manager at the Australian College of Applied Psychology, Ian Drummond, says, “Flex provides a robust system for managing copyright compliance; compiling course material without reinventing the wheel; and has the added benefit of a central repository for storing and accessing content. Flex has made our jobs easier so we can spend more time on adding value.”

Flex for Librarians is available as an inclusion with the Statutory Education Licence.

Major publishers Allen & Unwin, Australian Academic Press, Bloomsbury Publishing, Cengage, CSIRO, HarperCollins, McGrawHill, Pearson, PsychOz, Oxford University Press and Wolters Kluwer are providing digital files for use through Flex. copyright.com.au/flex

Diana Rigg and PLD The majority of Copyright Agency’s royalty payments come from the education sector – schools, universities, TAFE and private education providers. So, naturally, the majority of our payments go to educational publishers, from small local publishers to multinational publishers with Australian offices. All of them are dedicated to creating resources that support educators in their quest to help students achieve their potential.

Diana Rigg, a former teacher who founded Perth publisher PLD, is a great example of the passion that infuses this industry. She has been awarded the Primary Educational Publisher of the Year Award for two consecutive years – 2018 and 2019 – voted for by educators all over Australia.

“We create tools for primary educators to enhance literacy development in young children and we’re so grateful to be recognised by teachers across the country,” Diana says.

Diana started her career as a teacher in 1992 and recognised early on that her tertiary training had not prepared her for the literacy and learning needs she encountered in the classroom.

While completing a Masters in Education, Diana became aware of the significant lag between the publication of research findings and their eventual application in the curriculum and ultimately the classroom. This motivated Diana to ensure the most current research is finding its way into Australian classroom practises.

In 2007 she started her own speech pathology practice, PLD, initially comprised of speech pathologists focused on servicing children with language and literacy difficulties, but after a year and a half introducing occupational therapists too.

PLD was a clinic, a consultancy and a publishing house.

In addition to delivering services to children, the clinic assisted the publishing house by trialling and testing the devised programs. The success of the publishing range can be attributed to the clinic’s trialling of the programs.

In 2011, Diana made the decision to close the clinic and focus on the bigger picture – equipping educators with evidence-based programs and techniques developed by her speech pathologists and occupational therapists.

PLD has gone from strength to strength. Diana says, “PLD’s point of difference is that the programs have been designed by specialists (speech pathologists and occupational therapists) for generalists (educators)."

"I was thrilled that just 48 hours after the awards were announced there were hundreds of social media comments. My favourite was from a classroom teacher who said, ‘It helps when you have a great product’.”

PLD's founder Diana Rigg with her 2019 Educational Publisher of the Year Award (Primary). Photo: Lindsay Edwards.

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LICENSING AT WORK

100+

NEW BUSINESS LICENCES

Businesses are more aware of governance than ever before and a Copyright Agency licence is considered a benchmark in meeting minimum operating requirements. This includes licences for sharing business intelligence, such as journal articles and reports, and bespoke licences for using artwork on merchandise.

Business Licensing In the 2018-19 financial year, more than 100 companies purchased copyright licences for the first time, a growth of 10.5% on the previous year. Of those, licences sold to Australian councils have grown by 24%.

Leaders in the property sector, Multiplex and LendLease, also acquired licences.

Copyright Agency’s commercial licensing team has been closely engaged with regulatory managers in the health sector around the reuse of scientific literature, ensuring understanding of copyright obligations in a number of key areas and that an annual licence is an industry standard best practice.

ALMOST

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NEW EDUCATION LICENCES

The agency also produced a Copyright Governance Risk and Compliance Guide that explores the use of copyright works in a business context, explaining how this can give rise to operational and reputational risks, and proposing simple steps to help ensure an organisation is hitting a benchmark for copyright compliance.

Education Licensing Apart from the collective licence negotiated with the schools’ sector, agreements were also finalised with 79 new private education providers, including Foundation Education, Australian Institute of Personal Trainers, Endeavour College of Natural Health and ILSC Language Schools.

We also collaborated with music collecting societies APRA AMCOS, ARIA and PPCA to hold our first shared exhibition at the Early Childhood Australia Conference to promote awareness of the inter-society Early Childhood Education Copyright Licence.

New multi-year agreements were also made nationwide with the TAFE sector, and a commitment was made to discuss new products, including offering our cloud-based course compiler, Flex, as part of the licence.

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Visual Arts Licensing The Visual Arts team licensed everything from art on sneakers and miniature trains, to First Nations work being adapted for metallic screens on windows, to Picasso and Matisse works for ABC TV’s Play School Art Time. Licensing revenue grew by 20% in 2018–19.

Gorman and Mangkaja set benchmark Over the past 10 years, fashion label Gorman has produced collections with more than 80 local and international contemporary artists, designers and creators, but until this year, it had not worked with Indigenous artists.

One of Australia’s most remote art centres, Mangkaja Arts Resource Agency in WA, approached Lisa Gorman

to design a clothing collection using their artists, and the Copyright Agency negotiated a national benchmark in fashion licensing rights for the adaptation of the artists’ works.

Gorman founder and CEO, Lisa Gorman says, “I knew that (arts centre manager) Belinda Cook, at Mangkaja, held the interests of her artists at the forefront and that she would work to facilitate their goals within this project. Having an authority on Indigenous art, and a link between myself and the artists to negotiate the cultural elements of such a project, has made the collaboration possible.

“On top of that, having a copyright licence agreement that ensured all was above board, fairly negotiated and documented, gave us all the confidence to proceed with the collaboration.”

Top left: Artist Graham Toomey's Wiradjuri Dreaming was licensed for use on an NBN node. It's one of dozens of artworks the Copyright Agency has licensed to NBN Co's delivery partner, Downer. Photo: Arlette Martin. Bottom left: Artist Jakayu Biljabu is pictured in front of the window screen adapted from her licensed artwork Pitu, Kulilu at a remote medical clinic in the Western Desert. Photo courtesy of Kaunitz Yeung Architects/Brett Boardman. Top right: Fashion designer Lisa Gorman (right) with Domanique Hutchins who models a dress from the Mangkaja Collection. Copyright Agency licensed the works of five Western Australian Indigenous artists for the collection. Photo: Vassi Lena.

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SUPPORTING AUSTRALIAN CREATIVITY Copyright Agency supports a creative Australia – through our Cultural Fund, through Fellowships and through other direct support of festivals, awards and organisations that foster and promote the work of authors, publishers and artists.

Cultural Fund Our members commit 1.5% of revenue every year for vital grants to enhance the profile of Australian creators and to support our dynamic writing, publishing and visual arts sectors.

In 2018–19, more than $1.5m was approved through the Cultural Fund for 58 projects, 11 grants for the IGNITE Fund (for emerging creators) and six for the CREATE Fund (for established creators).

Fellowships Five Fellowships – three new in 2018–19 – were awarded: two for authors, one for a visual artist, one for a publisher and one for a teacher.

Alongside the Author Fellowship (first awarded in 2015), the Cultural Fund introduced a new Fellowship for Non-Fiction Writing and a Fellowship for a Visual Artist, each worth $80,000. The Fellowships provide mid-career Australian authors and artists with pivotal financial support to help them to produce important new works.

The Fellows are: • Author Fellowship: Melbourne writer Jeff Sparrow, for his compelling project Thinking Differently: Other minds and the challenge of climate change.

• Fellowship for Non-Fiction Writing: Literary critic and academic Bernadette Brennan, who will research and write a significant biography on award-winning Australian short-story writer Gillian Mears.

• Fellowship for a Visual Artist: Indigenous artist Karla Dickens, is developing a multimedia installation titled A Dickensian Circus that will celebrate the lives of Indigenous boxers and the famous Lismore acrobat Cornelius Sullivan.

The Publisher Fellowship was awarded to Justin Ractliffe (see page 12) and the Reading Australia Fellowship was awarded to Alex Wharton (see page 15).

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Left top to bottom: 2018 Fellows Jeff Sparrow (Author) and Bernadette Brennan (Non-Fiction). Photo: Caitlin Hicks.

Cover of the Cultural Fund-sponsored novella edition of the Griffith Review. Image: Monica Rohan, Cold Frizzle 2016.

Artwork Mother is my Monarch by Cultural Fund grant recipient Julia deVille. Photo courtesy of the artist. Year 4 student Victoria with the poem she created through the 'Poetry in First Languages' program supported by the Cultural Fund. Photo: Tad Souden. 2019 John Fries Award winner, Justine Youssef. Photo: Jessica Maurer. Top right: Miles Franklin shortlisted authors from left, Dr Michael Mohammed Ahmad, Melissa Lucashenko (winner), Rodney Hall, Jennifer Mills, Gregory Day and Gail Jones. Photo: Belinda Rolland.

Miles Franklin Literary Award

Resale Royalty scheme

Copyright Agency sponsors this highly prestigious award every year and, particularly, supports the shortlisted authors, with $5,000 each (plus travel and accommodation to the shortlist announcement) and promotion of their books to the public through creation of videos, a publicity and social media campaign, and providing bookmarks, stickers and posters to booksellers.

The Resale Royalty Right for visual artists has generated over $7 million in royalties for 1,800 artists from more than 19,000 resales since it began in 2010.

In 2018–19 we paid over $690,000 in resale royalties to 352 artists and their beneficiaries.

This year, a brand refresh portraying a young and dynamic Miles Franklin – in a striking hat, with a brolly and enormous plait – brought her inspiring presence to the fore.

John Fries Award Sydney artist Justine Youssef was the winner of the $10,000 John Fries Award at the opening of the award’s 10th exhibition at UNSW Galleries in Sydney.

The judges also highly commended mother-daughter duo Betty Chimney and Raylene Walatinna from South Australia for their work Nganampa Ngura (Our Country).

Ms Youssef was awarded the prize for her performative, video and installation work Under the table I learnt how to feed you, in which she documented the women in her family in the courtyard of a Lebanese bakery in southwest Sydney, a site of social and cultural significance for the Arabic population in the area.

Sydney Contemporary Copyright Agency has partnered with Sydney Contemporary international art fair for a second year to present TALK Contemporary – a series of panel discussions featuring leading figures in the arts exploring topical and controversial themes.

The number of artists benefitting from the scheme steadily increases, with 200 artists having their first eligible resale in this year.

Aboriginal and Torres Strait Islander artists are greatly benefitting from the scheme, receiving 37% of the royalties.

Of all the artists receiving royalties, over 36% reside in the Northern Territory, while another 18% reside in South Australia and Western Australia – mostly in central Australia, demonstrating the regional and remote impact of the scheme.

Blockchain project to authenticate resales In conjunction with Desart’s project to research and pilot the digital labelling of Aboriginal and Torres Strait Islander products, Copyright Agency researched blockchain, looking for ways in which to better identify eligible resales and get royalty payments to artists faster.

Having completed research, built a test visual arts blockchain and met with the many interested parties, it was determined that blockchain applications for the visual arts was still at a “proof of concept” stage. In the meantime, we have built our knowledge and feel well-positioned to engage with the market when the time comes.

Annual Report 2018–19

21

AWARDS AND SPONSORSHIP

The Copyright Agency sponsors the following awards either directly or through our Cultural Fund.

Money given to the recipient as a component of the award is noted.

Educational Publishing Awards Australia Primary Publisher of the Year PLD Secondary Publisher of the Year Oxford University Press

Griffin Award (Australian playwriting) Winner $10,000

Mark Rogers, Superheroes

Australian Book Industry Awards 2019

Shortlist $1,000 each

Non-fiction award

Olivia Clement, Heart Soul Yoga Studio Beirut

Behrouz Boochani trans. by Omid Tofighian, No Friend But The Mountains: Writing From Manus Prison (PanMacmillan)

Shannon Murdoch, Dog & Boy

Bragg UNSW Press Prizes for Best Australian Science Writing 2018

John Fries Award 2019

Dr Andrew Leigh MP, ‘From bloodletting to placebo surgery’, an excerpt from his book Randomistas

Justine Youssef Under the table I learnt how to feed you

Bragg UNSW Student Prize for Science Writing 2018 Preethika Mathan, Santa Sabina College (NSW), ‘i-Care’

Carmel Bird Digital Literary Award (Spineless Wonders) Winner $3000

Tanya Vavilova, Grub Finalists $1,000 each

Megan McGrath, All Hands

Ryan Watson, The Fountain

Winner $10,000

Highly Commended

Betty Chimney and Raylene Walatinna Nganampa Ngura (Our Country)

Miles Franklin Literary Award Shortlist 2019 $5,000 each

Melissa Lucashenko (winner), Too Much Lip (The University of Queensland Press) Michael Mohammed Ahmad, The Lebs (Hachette Australia)

James Hughes, Understanding Almost Nothing of the World

Gregory Day, A Sand Archive (Picador Australia)

Dorothy Hewett Award for an unpublished manuscript

Gail Jones, The Death of Noah Glass (Text Publishing)

Angela Rockel, Rogue Intensities: a politics of the imagination

Daisy Utemorrah Award for an unpublished manuscript of junior or YA fiction by an Aboriginal and/or Torres Strait Islander writer Kirli Saunders, Mother Speaks 22

Diane Stubbings, Night

Copyright Agency

Rodney Hall, A Stolen Season (Picador Australia) Jennifer Mills, Dyschronia (Picador Australia)

National Indigenous Story Awards Winners 2018

Hannah Donnelly, Before the End of their World Alisha Geary, Spirits of the Islands Jo Allen, Spin Cycle

NAVA Visual Artist Fellowship 2018 Two $20,000 fellowships

The Lifted Brow Prize for Experimental Non-Fiction 2018

Janet Burchill & Jennifer McCamley

Winner $5,000

Dr Alex Gawronski

Eloise Grills, big beautiful female theory

Queensland Literary Awards David Unaipon Award For An Unpublished Indigenous Writer 2018 Kirstie Parker The Making of Ruby Champion

Queensland Poetry Festival Oodgeroo Noonuccal Indigenous Poetry Prize 2018

Runners up $500 each

Cassandra Rockwood-Rice, Root Bed Joint second runner ups

Jessie Berry-Porter, To Un Fold A Body Of Small Talks Bella Klaver, we need to talk about Antarctica

Walkley Mid-Year Awards 2019

Brenda Saunders, Quondongs

$5,000 each

Stanley Awards

Arts Journalism

Book Illustrator Of The Year Award 2018

Jane Howard, How Australian theatre rebalanced its gender disparity (ABC)

Buddy Ross

Stella Prize Longlist $1,000 each

Vicki Laveau-Harvie (winner), The Erratics (Fourth Estate)

Walkley-Pascall Award For Arts Criticism Jeff Sparrow, A Place of Punishment: No Friend But the Mountains by Behrouz Boochani (The Sydney Review of Books)

Jenny Ackland, Little Gods (Allen & Unwin) Stephanie Bishop, Man Out of Time (Hachette Australia)

Top: Walkley Foundation Mid-Year Award winners including the ABC's Jane Howard (in glasses) who won $5000 from Copyright Agency for the Arts Journalism award. Photo: Adam Hollingworth.

Belinda Castles, Bluebottle (Allen & Unwin) Enza Gandolfo, The Bridge (Scribe Publications) Chloe Hooper, The Arsonist: A Mind on Fire (Penguin Random House) Gail Jones, The Death of Noah Glass (Text Publishing) Jamie Marina Lau, Pink Mountain on Locust Island (Brow Books) Bri Lee, Eggshell Skull (Allen & Unwin) Melissa Lucashenko, Too Much Lip (UQP) Maria Tumarkin, Axiomatic (Brow Books) Fiona Wright, The World Was Whole (Giramondo Publishing)

Annual Report 2018–19

23

DIRECTORS’ REPORT

The Directors present their report together with the financial report of Copyright Agency Limited (the “Company”) for the year ended 30 June 2019 and auditor’s report thereon. This financial report has been prepared in accordance with Australian Accounting Standards .

Directors’ names The names of the Directors in office at any time during or since the end of the year are: •

David Barnett

•

Anthony Bertini

•

Jane Curry

•

Jason Eades

•

Adele Ferguson

•

Dr Kate Harrison

•

Helen O’Neill

•

Christopher Pash

•

Lucrezia Russell

•

Dr Oliver Watts

•

Kimberley Williams AM

After deducting the costs of running the Copyright Agency, including employee, occupancy and other relevant expenses, the Company allocated $127,759,254 (2018: $128,588,281) to distribution pools made available for rights holders, including Australian writers, publishers, surveyors and visual artists.

The deficit of the Company for the year of $741,877 (2018: surplus $113,023) represents monies disbursed by the Company for certain non-operating expenses sourced from the Future Fund and Indemnity Fund for that purpose. Surpluses of the Company represent monies retained by the Company for potential future expenses and allocated to those funds.

The Company continued its commitment to pay distributions to members on a more timely basis, subject to its underlying principles and policies on equity and during the year distributed cash amounts totalling $116,375,207 (2018: $123,914,887).

Principal activities The principal activity of the Company during the year was that of a copyright collecting society.

The Company was established in 1974 to act as agent for its member authors and publishers to collectively administer the copying of their works in educational institutions and other organisations. The Company is based in Sydney. The Company: •

Has been declared by the Commonwealth Attorney General to be the collecting society to administer the statutory licence created under Part VB of the Copyright Act 1968 but now governed by Part IVA Division 4, for the copying and communication of copyright material by educational institutions, institutions;

•

Has been declared by the Copyright Tribunal as the collecting society to administer the statutory licence in Division 2 of Part VII of the Copyright Act 1968 in relation to government copies of works and published editions of works, other than works included in a sound recording, cinematograph film or a television or sound broadcast;

The Directors have been in office since the start of the year to the date of this report unless otherwise stated.

Results and review of operations Financial results The Company collected and accrued royalties for the year from Australian schools, universities, colleges, government bodies, corporations and overseas collection societies totalling $149,144,503 (2018: $150,112,766).

With the addition of interest income on funds invested and other minor sources of income, revenues for the year totalled $150,850,012 (2018: $152,098,001).

24 2

Copyright Agency

•

•

Has been appointed by the Australian Government as the collecting society under the Resale Royalty Right for Visual Artists Act 2009 for collection of resale royalties payable in respect of artworks of eligible artists; and Merged with Viscopy Limited by way of scheme of arrangement from 30 November 2017 with the effect that Viscopy Limited ceased to exist and the members of Viscopy Limited automatically became members of the Company. Copyright Agency assumed Viscopy’s contractual obligations and continues to manage visual arts licensing and related activities on behalf of former Viscopy members.

Significant changes in state of affairs There were no significant changes in the Company’s state of affairs that occurred during the financial year, other than those referred to elsewhere in this report.

Short-term and long-term objectives and strategies The Company’s mission is to provide simple ways for people to reproduce, store and share creative content, including words and images, in return for equitable payment to copyright owners. To implement this mission, the Company has adopted the following objectives in its current three year plan: •

Serve our members;

•

Influence policy and advocate for copyright;

•

Ensure fair remuneration of members for use of their work; and

•

Optimise operations.

These objectives are to ensure that the Copyright Act continues to protect the rights of Australian creators and the Company meets the needs of its members at all times.

Company performance The Company has adopted a strategic plan which details the strategies for achieving these objectives and for measuring the Company’s performance.

These objectives include: •

Legislative outcomes which continue to protect the rights of creators;

•

Update distribution policies to accord with data received;

•

Secure statutory licensing revenue and increase corporate licensing; and

•

Improved business systems and reduced operating costs.

After balance date events No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the Company, the results of those operations, or the state of affairs of the Company in future financial years.

Likely developments The Company expects to maintain the present status and level of operations.

MMO litigation: Copyright Agency’s licensees, media monitoring organisations Isentia Pty Ltd, Meltwater Pty Ltd and Streem Pty Ltd, have each commenced proceedings in the Copyright Tribunal (the Tribunal) in order to seek a licence for their media monitoring activities.

Each of these parties has previously been licensed

by Copyright Agency, however all have rejected Copyright Agency’s proposed new industry model licence and made application to the Tribunal on the basis that, there is no licence scheme currently in operation, they require a licence and Copyright Agency proposes a licence on unreasonable terms.

The Tribunal has ordered that Meltwater and Streem remain on their previous licence agreements during the proceedings and until the final determination of the matter, with a retrospective adjustment. In Isentia’s case, the Tribunal ordered an interim licence which varied from its previous licence but also with a retrospective adjustment. The Tribunal has also set down the matter for hearing in October 2020.

Annual Report 2018–19

25 3

Directors’ Report continued

NSW Litigation: In November 2017, the Company started proceedings in the Tribunal against the State of New South Wales.

There has not been a remuneration agreement in place between the Company and the State of NSW since 1 July 2012. The issues in dispute before the Tribunal are the rate that should be payable by the State for the use of copyright material under the statutory licence for Governments and the method to estimate usage of that material. After Tribunal-ordered mediation failed, the Tribunal has ordered a timetable with a hearing set down for March 2020.

Litigation against Universities: The remuneration agreement between the Company and Universities Australia (on behalf of 39 participating institutions) expired on 31 December 2018.

Unfortunately, the Company and Universities Australia were not able to reach an agreement on the remuneration payable by the universities sector for the copying and communication of copyright material and the appropriate method of sampling to monitor this use.

The Company was required to initiate proceedings in the Tribunal, requesting that the Tribunal determine the applicable rate and sampling method. Copyright Agency sought interim orders from the Tribunal at the same time to ensure that its members continue to be paid while the matter is before the Tribunal. The Tribunal ordered, on an interim basis, that the universities continue to pay the same amount but with half payable to the Company for distribution and half to be held in an escrow account to be dealt with on final determination of the matter.

The Tribunal has set down the matter for hearing in September 2020.

Future Fund: The Future Fund was established in 2013 in response to such issues as the Australian Law Reform Commission recommendation for radical changes affecting licensing arrangements. In Canada comparable changes to Copyright Law saw a catastrophic collapse in some licensing revenues. The Future Fund was built up over several years from interest on licence fees and allocations that were unpaid for four years. As noted in the 2016 Directors’ Report, the purpose of the Fund is to “…safeguard and manage the rights of members

26 4

Copyright Agency

including but not confined to taking such necessary actions in communications, research and advocacy… to the extent required consistent with the Board’s prudent judgment”. Further, the Board noted in the 2017 Directors’ Report that “The Fund may also be called upon to conduct litigation which is necessary to protect the rights of creators, for example, to clarify the role of exceptions in the Copyright Act 1968”.

In 2017, the Board reported that it had determined to maintain the Fund but that it would periodically review the need for it and any amounts no longer required for safeguarding members’ interests will be returned to members.

The Board reviewed the operation of the Fund and in 2018 determined to reduce the cap on its quantum by $3 million phased over three years. The Board further reviewed the Fund in 2019 and resolved to reduce the Fund by a further $2 million phased over two years.

These reductions will be returned to members by way of an offset against operating costs in accordance with the Copyright Agency Distribution Policy, which is available on the Copyright Agency website.

Environmental regulation The Company’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth or of a State or Territory.

Dividends paid, recommended and declared The Company is limited by guarantee. No dividends are permitted to be paid under the constitution of the Company.

Directors’ Report continued Information on Directors and Company secretary

David Barnett

Director

Qualifications

BA, P Grad Dip HRM, FAICD

Experience

Managing Director of Pearson Asia Pacific and 30 years in publishing. Other directorships include Pearson Australia Group. Former Chair of Robert Menzies College.

Special responsibilities

Australian Publishers Association Director since 2011. Convenor of Education Portal Committee. Member of Audit and Finance Committee. Member of Nomination and Governance Committee.

Anthony Bertini Director Qualifications

BA

Experience

Chair of Thumper One, an investment and advisory firm with interests in data mining and processing, blockchain technologies, social media platforms, electronic payment gateways, cleantech and biometric security. Co-founder and Chair of Organic Technology , a global producer of alternative proteins and pharmaceutical oils. Chair of TBXx3, a blockchain solution for securing the global supply chain. Non-executive director of Nano Cellulose. Former Australian deal maker UKTI (Global Entrepreneur Program) and CEO and founder of BMC Media, publisher of IPC Magazines Australia; former Group Sales Director of The Bulletin and Australian Business Magazines and co-founder of 350.org Australia.

Special responsibilities

Independent Director since May 2010. Member of Audit and Finance Committee. Member of Cultural Fund Committee. Member of Nominations and Governance Committee. Member of Remuneration Committee.

Jane Curry Director Qualifications

BSc (Hons)

Experience

Jane has been the Managing Director of Weldon Publishing, Macquarie Library, National Book Distributors, Quarto Australia and published her own list at Pan Macmillan Australia. Jane founded the trade-publishing house Ventura Press in 2002. Director of the Australian Publishers Association and convenor of its Independent Publishers Committee.

Special responsibilities

Australian Publishers Association Director since 2015. Member of Cultural Fund Committee. Member of Education Portal Committee.

Jason Eades Director Qualifications

Associate Diploma of Arts - Koorie Studies (Monash University College Gippsland)

Experience

Born and raised on Gunnai country in eastern Victoria. More than 25 years’ experience in leadership roles within the Indigenous for purpose sector. Currently holds the position of Chief Executive Officer, Welcome to Country.

Previously Director, Consulting with Social Ventures Australia. Non-executive Director at Australian Indigenous Mentoring Experience (AIME) and a member of the Australia Council’s Aboriginal and Torres Strait Islander Arts Strategy Panel.

Special responsibilities

Independent Director since December 2017. Member of Cultural Fund Committee.

Adele Ferguson Director Qualifications

BEcon, BA (Hons)

Experience

Journalist and author with a wide range of experience, including as a business commentator and an investigative reporter for The Sydney Morning Herald, The Age and The Financial Review. Awards include The Gold Walkley, two Gold Quills, two Gold Kennedys, the Graham Perkin Journalist of the Year and a Logie. Author of best-selling unauthorised biography Gina Rinehart: The Richest Woman in the World, Banking Bad: How Corporate Greed and Broken Governance Failed Australia and Banking Bad: Whistleblowers – One Journalist’s Fight for the Truth.

On the board of the Melbourne Press Club.

Special responsibilities

Australian Society of Authors appointed Director since 2015. Member of Audit and Finance Committee.

Member of Cultural Fund Committee. Member of Nominations and Governance Committee.

Annual Report 2018–19

27

Directors’ Report continued Information on Directors and Company secretary

Kate Harrison Director Qualifications

LLB (Hons), Masters of Law (Columbia), PhD (Uni of Syd)

Experience

Partner with Gilbert + Tobin law firm. Experience encompasses corporate and commercial litigation, intellectual property advice, commercial licensing and commercialisation across technology industries, media and communications, the music industry, advertising and consumer goods. Also worked on a number of high-profile public inquiries and Royal Commissions. Public policy experience having worked as a senior advisor in Canberra between 2008 and 2011.

Special responsibilities

Independent Director since March 2018. Convenor of the Copyright Committee. Member of Audit and Finance Committee. Member of Cultural Fund Committee.

Helen O’Neill Director Qualifications

BA (Hons)

Experience

Journalist with The Sydney Morning Herald, The Australian and Vogue Australia. Author, whose recent books include biographies of Harry Seidler, Florence Broadhurst and the department store David Jones. Co-founder of Curly Swirls Productions. Director of Australian Society of Authors, serving on its Executive Committee.

Special responsibilities

Australian Society of Authors appointed Director since 2014. Member of Cultural Fund committee.

Lucrezia Russell Director Qualifications

BA (commerce), CPA

Experience

Former General Manager of John Wiley & Sons Higher Education Division and former Convenor of the Australian Publishers Association Tertiary and Professional Committee. Over 20 years in Higher Education publishing. Currently Senior Commissioning Editor for Law and Business Titles at Cambridge University Press.

Special responsibilities

Australian Publishers Association elected Director since 2010. Convenor of Audit and Finance Committee.

Member of the Copyright Committee. Member of Cultural Fund Committee. Member of Education Portal Committee. Member of Remuneration Committee.

Christopher Pash Director Qualifications

GAICD

Experience

Author, working journalist and media executive. Former Director of Content Strategy at Dow Jones Asia Pacific, CEO of Asia Pulse, a joint venture of Asia news companies, Editor in Charge, Correspondent and Bureau Chief at Australian Associated Press. Former Director of the Pacific Area Newspaper Publishers’ Association and member of the Australian Institute of Company Directors. Chair of the Australian Society of Authors. Author of The Last Whale (Fremantle Press, 2008), a narrative non-fiction book about the final days of whaling in Australia.

Special responsibilities

Australian Society of Authors appointed Director since November 2016. Member of Cultural Fund Committee.

Member of Education Portal Committee.

Dr Oliver Watts Director

28

Qualifications

Ba LLB MFA PhD (Syd)

Experience

Artist, curator, Academic. Head Curator of Artbank. Previously Senior Lecturer at the National Institute of Dramatic Art (NIDA) and Lecturer at Sydney College of the Arts (University of Sydney). Has shown internationally and nationally and is currently represented by Chalk Horse gallery and This is No Fantasy (Melbourne). Watt’s research centres on the nexus between art and law and has published widely in this area.

Special responsibilities

Artist Director since December 2017. Member of Cultural Fund Committee. Member of the Copyright Committee.

Copyright Agency

Kimberley Lynton Williams AM Chair Qualifications

B.Mus, Hon DLitt

Experience

Media executive, composer and professional executive; former CEO of News Limited, Foxtel, Southern Star, the Australian Film Commission and Musica Viva. Kim Williams has also served as a member and chair of other boards including as Chair of the Sydney Opera House Trust, Musica Viva Australia, Sydney Symphony Orchestra and of the Australian Film Finance Corporation. Currently the Chair of the Thomson Reuters Board of Trustees, the Cranlana Program, the State Library of NSW Foundation (Co-Chair), Mojo Power and VidCorp.

Also on the Board of the Myer Foundation, the University of Western Sydney Foundation, Myer Family Investments and serving as a Commissioner of the Australian Football League.

Special responsibilities

Independent Director since January 2015. Convenor of Cultural Fund Committee. Member of Audit and Finance Committee. Member of Remuneration Committee. Member of Nominations and Governance Committee.

Josephine Johnston Company Secretary Qualifications

Llb (Hons)

Experience

General Counsel and Company Secretary. Also responsible for the Human Resources Team. A corporate lawyer with experience in top tier law firms, senior in-house positions and advising the Crown both as a barrister and solicitor.

Annual Report 2018–19

29

Directors’ Report continued Meetings of Directors

Board of Directors’

Directors

Audit and Finance Committee

Cultural Fund Committee

Copyright Committee

Number eligible to attend

Number attended

Number eligible to attend

Number attended

Number eligible to attend

Number attended

Number eligible to attend

Number attended

David Barnett

6

4

5

4

–

–

–

–

Anthony Bertini

6

4

5

3

5

3

–

–

Jane Curry

6

6

–

–

5

5

–

–

Jason Eades

6

5

–

–

5

3

–

–

Adele Ferguson

6

5

5

4

5

4

–

–

Kate Harrison

6

5

5

4

5

3

7

7

Helen O’Neill

6

6

–

–

5

5

–

–

Christopher Pash

6

5

–

–

5

4

–

–

Lucrezia Russell

6

6

5

5

5

5

7

7

Oliver Watts

6

6

–

–

5

5

7

6

Kimberley Williams AM

6

6

5

5

5

5

–

–

The Remuneration Committee and the Nominations and Governance Committee have considered matters throughout the year by email correspondence and telephone conference calls as required.

Directors’ remuneration Under Article 38 of Copyright Agency’s Constitution, Directors’ remuneration is determined by the Company in general meeting.

Details of the nature and amount of each element of the emoluments of each Director of the Company are as follows:

30 8

Base Remuneration

Superannuation Contributions

Total

$

$

$

David Barnett

30,158

2,865

33,023

Anthony Bertini

33,023

–

33,023

Jane Curry

33,023

–

33,023

Jason Eades

30,158

2,865

33,023

Adele Ferguson

30,158

2,865

33,023

Kate Harrison

30,158

2,865

33,023

Helen O’Neill

30,158

2,865

33,023

Christopher Pash

30,158

2,865

33,023

Lucrezia Russell

30,158

2,865

33,023

Oliver Watts

30,158

2,865

33,023

Kimberley Williams AM

60,313

5,730

66,043

Copyright Agency

Members guarantee The Company is incorporated under the Corporations Act 2001 and is a company limited by guarantee. If the Company is wound up, the Constitution states that each member is required to contribute to a maximum of $20 each towards meeting any outstanding and obligations of the group. At 30 June 2019, the number of members was 36,707.

Indemnification and insurance of officers The Company has indemnified the Directors and executives of the Company for costs incurred, in their capacity as a Director or executive, for which they may be held personally liable, except where there is a lack of good faith.

During the financial year, the Company paid a premium in respect of a contract to insure the Directors and executives of the Company against a liability to the extent permitted by the Corporations Act 2001.

Indemnification of auditors No indemnities have been given or insurance premiums paid, during or since the end of the year, for any person who is or has been an auditor of the Company.

Auditor’s independence declaration A copy of the auditor’s independence declaration under section 307C of the Corporations Act 2001 in relation to the audit for the financial year is provided with this report.

Proceedings on behalf of the Company No person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings.

Signed on behalf of the board of Directors.

Director: _________________________________ Kimberley Williams AM

Director: _________________________________ Lucrezia Russell

Dated this

20 October 2019

Annual Report 2018–19

31 9

AUDITOR'S INDEPENDENCE DECLARATION

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001 To the Directors of Copyright Agency Limited I declare that, to the best of my knowledge and belief, in relation to the audit of Copyright Agency Limited for the financial year ended 30 June 2019 there have been:

KPMG

i.

no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

ii.

no contraventions of any applicable code of professional conduct in relation to the audit.

Chris Allenby Partner Sydney 15 October 2019

11

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

32 10

Copyright Agency

Liability limited by a scheme approved under Professional Standards Legislation.

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2019

Note Revenue

2019 $

2018 $

2

150,850,012

152,098,001

Employee benefits expense

3(b)

(12,461,270)

(13,299,797)

Depreciation and amortisation expense

3(c)

(1,370,167)

(906,800)

Occupancy expense

(724,394)

(639,731)

Consultancy costs

(624,996)

(959,631)

Sampling costs

(1,222,081)

(1,176,696)

(376,777)

(404,700)

(2,051,328)

(1,651,033)

(433,651)

(455,616)

(280,994)

(342,777)

(1,244,459)

(1,358,442)

(20,790,116)

(21,195,223)

(750,049)

(35,411)

(57,412)

(40,823)

(807,461)

(76,234)

129,252,435

130,826,544

(127,759,254)

(128,588,281)

(2,235,058)

(2,125,240)

(741,877)

113,023

–

–

(741,877)

113,023

Less: expenses

Legal costs IT costs Marketing and communications Office running costs Other expenses

Payments made from Reserves Future Fund Reserve (Legal costs) Indemnity Fund Reserve (Other expenses)

Net surplus available for distribution Less: distributions Distribution paid and payable to members

11

Transfer to Cultural Fund Surplus / (deficit) for the year Other comprehensive income for the year Total comprehensive income before allocations to reserves

3(a)

The accompanying notes form part of these financial statements.

Annual Report 2018–19

33 11

POSITION STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2019

Note

2019 $

2018 $

Current assets Cash and cash equivalents

4

1,584,321

1,764,533

Cash on deposit

4

44,156,029

53,534,972

Trade and other receivables

5

5,696,983

4,011,203

Other assets

6

27,266,604

16,760,041

78,703,931

76,070,748

Total current assets Non-current assets Property, plant and equipment

7

6,558,002

2,851,473

Intangible assets

8

2,002,241

1,766,914

Total non-current assets

8,560,243

4,618,386

Total assets

87,264,180

80,689,134

Current liabilities Payables

9

3,671,744

3,333,272

Provisions

10

1,247,665

1,211,843

Distributions payable

11

25,492,221

15,315,190

Contract liabilities

12

37,957,847

40,571,287

68,369,477

60,431,592

Total current liabilities Non-current liabilities Payables

9

438,312

633,117

Provisions

10

266,188

282,313

704,500

915,430

69,073,977

61,347,022

18,190,203

19,342,112

Total non-current liabilities Total liabilities Net assets Equity Retained earnings

13

–

–

Reserves

13

18,190,203

19,342,112

18,190,203

19,342,112

Total equity

The accompanying notes form part of these financial statements.

34 12

Copyright Agency

STATEMENT OF CHANGES IN ACCUMULATED FUNDS FOR THE YEAR ENDED 30 JUNE 2019

Balance at 1 July 2017

Retained earnings

Future Fund reserve

Indemnity Fund reserve

Amalgamation reserve

Other reserve

Total equity

$

$

$

$

$

$

–

15,109,051

2,945,871

–

367,090

18,422,012

Surplus for the year

113,023

–

–

–

–

113,023

Payments made from reserves

76,234

(35,411)

(40,823)

–

–

–

Transfer surplus to reserves

(189,257)

–

146,315

–

42,942

–

Amalgamation with Viscopy Limited (net of transfer)

–

–

326,498

480,579

–

807,077

Balance at 30 June 2018

–

15,073,640

3,377,861

480,579

410,032

19,342,112

Balance at 1 July 2018

–

15,073,640

3,377,861

480,579

410,032

19,342,112

(741,877)

–

–

–

–

(741,877)

Payments made from reserves

807,461

(750,049)

(57,412)

–

–

–

Transfer surplus from reserves

(65,584)

–

65,584

–

–

–

Transfer to Distributions payable

–

–

–

–

(410,032)

(410,032)

Balance at 30 June 2019

–

14,323,591

3,386,033

480,579

–

18,190,203

Deficit for the year

The accompanying notes form part of these financial statements.

Annual Report 2018–19

35 13

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2019

Note

2019 $

2018 $

Cash flow from operating activities Cash receipts from customers Cash distributed to members and payments to suppliers and employees Net cash used in operating activities

15(b)

134,697,926

149,956,899

(141,006,193)

(154,912,796)

(6,308,267)

(4,955,897)

2,082,823

2,006,714

–

1,196,070

Cash flow from investing activities Interest received Net cash acquired on amalgamation Payment for property, plant and equipment

7

(4,777,222)

(1,064,667)

Payment for intangible assets

8

(556,489)

(1,926,290)

Decrease / (increase) in cash on deposit

4

9,378,943

(1,422,314)

6,128,055

(1,210,487)

(180,212)

(6,166,384)

Net cash from / (used in) investing activities Net increase / (decrease) in cash held Cash at the beginning of the financial year

15(a)

1,764,533

7,930,917

Cash at the end of the financial year

15(a)

1,584,321

1,764,533

The accompanying notes form part of these financial statements.

36 14

Copyright Agency

STATEMENTS NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2019

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES The financial report is for the entity Copyright Agency Limited (the “Company”) as an individual entity.

The Company is a company limited by guarantee, incorporated and domiciled in Australia. The Company is a not-for-profit entity for the purpose of preparing the financial statements. The registered office and principal place of business of the Company is Level 12, 66 Goulburn Street, Sydney NSW 2000.

A description of the nature of the Company’s operations and its principal activities is included in the Directors’ report on page 1, which is not part of this financial report.

The financial report was approved by the Directors as at the date of the Directors’ report.

The following is a summary of the material accounting policies adopted by the Company in the preparation and presentation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(a) Basis of preparation of the financial report Statement of compliance The financial report is a general purpose financial report that has been prepared in accordance with Australian Accounting Standards-Reduced Disclosure Requirements, Interpretations and other applicable authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001.

Historical cost convention The financial report is presented in Australian Dollars and has been prepared under the historical cost convention, as modified by revaluations to fair value for certain classes of assets as described in the accounting policies.

Critical accounting estimates and judgements The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

(b) Changes in accounting policies The Company has initially applied AASB 15 Revenue from Contracts with Customers and AASB 9 Financial Instruments from 1 July 2018. A number of other new standards are also effective from 1 July 2018, but they do not have a material effect on the Group’s financial statements.

Due to the transition methods chosen by the Company in applying these standards, comparative information throughout these financial statements has not been restated to reflect the requirements of the new standards.

AASB 15 Revenue from Contracts with Customers AASB 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaced AASB 118 Revenue, AASB 111 Construction Contracts and related interpretations.

Under AASB 15, revenue is recognised when a customer obtains control of the goods or services. Determining the timing of the transfer of control – at a point in time or over time – requires judgement.

The Company adopted AASB 15 using the cumulative effect method, with the effect of initially applying this standard recognised at the date of initial application (i.e. 1 July 2018). The disclosure requirements of AASB 15 have not generally been applied to comparative information. Adoption of AASB 15 does not have any material impact on the Company’s revenue and profit or loss.

AASB 9 Financial Instruments AASB 9 replaces AASB 139 Financial Instruments: Recognition and Measurement and is effective for annual reporting periods beginning on or after 1 January 2018.

Annual Report 2018–19

37 15

Notes to Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2019

The key changes introduced in AASB 9 are: (i) requirements for impairment of financial assets based on a three-stage ‘expected loss’ approach; (ii) limited amendments to classification and measurement of financial assets to add a third measurement category for debt instruments.

The new category of fair value through other comprehensive income is added to the existing categories for debt instruments, i.e. amortised cost and fair value through profit or loss; and (iii) amendments to AASB 7 Financial Instruments: Disclosures that significantly expand the disclosures required in relation to credit risk.

As a result of the adoption of AASB 9, the Company has adopted consequential amendments to AASB 101 Presentation of Financial Statements, which require impairment of financial assets to be presented in a separate line item in the statement of profit or loss and OCI. Impairment losses on trade and other receivables are presented under ‘other expenses’, similar to the presentation under AASB 139, and not presented separately in the statement of profit or loss and OCI due to materiality considerations.

(c) Accounting Standards issued but not operative at 30 June 2019 A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2019, and have not been applied in preparing these financial statements. The Company does not plan to adopt these standards early.

AASB 16 Leases AASB 16 removes the classification of leases as either operating leases or finance leases – for the lessee – effectively treating all leases as finance leases. Shortterm leases (less than 12 months) and leases of lowvalue assets (such as personal computers) are exempt from the lease accounting requirements. There are also changes in accounting over the life of the lease.

In particular, companies will not recognise a front-loaded pattern of expenses for most leases, even when they pay constant rentals. Lessor accounting remains similar to current practice i.e. lessors continue to classify leases as finance and operating leases. AASB 16 is effective 38 16

Copyright Agency

from annual reporting periods beginning on or after 1 January 2019, with early adoption permitted for entities that also adopt AASB 15. The Company is assessing the potential impact on its financial statements resulting from the application of AASB 16.

(d) Revenue Revenues are recognised at fair value of the consideration received net of the amount of goods and services tax (GST) payable to the taxation authority.

Revenue from rendering services The Company’s main source of revenue is from licence fees from licensees (customers). The Company acts as the ‘principal’ in the collection of licence fees as it has the primary responsibility for providing the services and latitude in establishing prices. Revenue from licence fees is recognised on a monthly basis over the time period for which the copying licence (contract) has been granted.

Consideration of licence fees can comprise fixed and variable elements. The variable consideration is only included in the transaction price if it is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur.

Licence fees invoiced but applicable to future periods are recorded as contract liabilities (deferred revenue) and transferred to revenue in the statement of comprehensive income over the relevant future period.

Interest income Interest revenue is recognised when it becomes receivable on a proportional basis taking in to account the interest rates applicable to the financial assets.

(e) Foreign currency transactions Transactions in foreign currencies are translated at the foreign exchange rate ruling at the date of the transaction.

Monetary assets and liabilities denominated in foreign currencies at the balance date are translated to Australian dollars at the foreign exchange rate ruling at that date.

Foreign exchange differences arising on translation are recognised in profit or loss. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

(f) Income tax

Depreciation

Current income tax expense or revenue is the tax payable on the current period’s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities.

The depreciable amount of all property, plant and equipment is depreciated over their estimated useful lives commencing from the time the asset is held ready for use. Land and the land component of any class of property, plant and equipment is not depreciated.

Specific provisions of the Income Tax Assessment Act 1997 (as amended), applicable to copyright collecting societies ensure: (a) copyright income collected and held on behalf of the members, pending allocation to the member; and (b) non copyright income that falls within certain limits; are not subject to income tax.

(g) Goods and services tax (GST) Revenues, expenses and purchased assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown inclusive of GST. Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.

(h) Cash and cash equivalents Cash and cash equivalents include cash on hand and at banks, short-term deposits with an original maturity of three months or less held at call with financial institutions, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

(i) Property, plant and equipment Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and any accumulated impairment losses.

Plant and equipment

Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

Class of fixed asset

Depreciation Depreciation rates basis

Leasehold improvements

14–26%

Straight line

Office equipment

7–33%

Straight line

Furniture, fixtures and fittings

1–12%

Straight line

Computer equipment

10–50%

Straight line

Systems development work in progress

Nil

Commence when ready for use

(j) Impairment of non-financial assets Intangible assets that have an indefinite useful life are not subject to amortisation and are therefore tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.

An impairment loss is recognised where the carrying amount of the asset exceeds its recoverable amount.

The recoverable amount of an asset is defined as the higher of its fair value less costs to sell and value in use.

The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the assets employment and subsequent disposal.

The expected net cash flows have been discounted to present values in determining recoverable amounts.

Plant and equipment is measured on the cost basis.

Annual Report 2018–19

39 17

Notes to Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2019

(k) Intangibles

(m) Leases

Internally developed software

Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership.

Internally developed software is initially recorded at the purchase price and amortised on a straight line basis over the period of 7 years. The balances are reviewed annually and any balance representing future benefits, the realisation of which is considered to be no longer probable are written off.

Internally developed software has been tested for impairment by determining the recoverable amount of the asset. The recoverable amount of assets is based on value-in-use calculations. These calculations are based on current financial forecasts and projected cash flows approved by management covering a period not exceeding five years. Management’s determination of cash flow projections are based on past performance and its expectation for the future.

(l) Employee benefits (i) Short-term employee benefit obligations Liabilities arising in respect of wages and salaries, annual leave and any other employee benefits expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates which are expected to be paid when the liability is settled. The expected cost of short-term employee benefits in the form of compensated absences such as annual leave is recognised in the provision for employee benefits. All other short-term employee benefit obligations are presented as payables. (ii) Long-term employee benefit obligations Liabilities arising in respect of long service leave and annual leave which is not expected to be settled within twelve months of the reporting date are measured at the present value of the estimated future cash outflow to be made in respect of services provided by employees up to the reporting date.

Employee benefit obligations are presented as current liabilities in the balance sheet if the entity does not have an unconditional right to defer settlement for at least twelve months after the reporting date, regardless of when the actual settlement is expected to occur.

40 18

Copyright Agency

Operating leases Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as an expense on a straight-line basis over the term of the lease.

Lease incentives received under operating leases are recognised as a liability and amortised on a straightline basis over the life of the lease term.

(n) Financial instruments Classification A financial asset or financial liability is initially measured at fair value plus transactions costs, except where the instrument is classified as at ‘fair value through profit or loss’ (‘FVTPL’) in which case transactions costs are recognised as expensed immediately in profit or loss. A trade receivable without a significant financing component is initially measured at the transaction price.

The Company classifies its financial assets into the following categories: amortised cost, FVTPL or financial assets at fair value through other comprehensive income (‘FVOCI’). The classification depends on the purpose for which the instruments were acquired. Management determines the classification of its financial instruments at initial recognition. Financial assets are not reclassified subsequent to their initial recognition unless the Company changes its business model for managing financial assets.

Financial liabilities Financial liabilities include trade payables, other creditors and loans from third parties. Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Financial liabilities are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least twelve months after the reporting period.

(o) Distributions payable The Company holds the net distributable amount for each year in trust for rights holders of the copyright material.

These rights holders are eligible to receive allocations held on their behalf upon completing necessary documentation regarding entitlement to receive the allocation.

Payments are made as and when the required documentation is completed. Until this stage is reached, all funds are held in trust for the rights holders up to a period of four years. The Board of Directors may decide that special circumstances exist and continue to hold an allocation in trust for a maximum of two further years.

At the expiry of the trust period, allocations that have not been paid are ‘rolled over’ and applied in accordance with the direction of the Board. These amounts are currently used to offset operating cost deductions from licence fees before distribution.

In administering the licences, the Company collects and distributes remuneration payable by various licensees, using a variety of data sources. The distributable amount is the total amount received from licensees for the distribution period after deducting operating expenses (offset by bank interest and unpaid allocations that have been rolled over), providing for taxation if applicable.

(p) Amalgamation reserve The amalgamation reserve is utilised for amalgamations with other entities. The amount presented is equal to the accumulated fair values of the net assets of the entities acquired. The individual assets and liabilities acquired are presented in the statement of financial position.

Annual Report 2018–19

41 19

Notes to Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2019

2019 $

2018 $

NOTE 2: REVENUE Revenue from rendering of services Interest income Other income

149,114,503

150,112,766

1,620,216

1,821,689

115,293

163,546

150,850,012

152,098,001

65,584

146,315

(807,461)

(76,234)

–

42,942

(741,877)

113,023

Other income is primarily made up of recoveries of expenditure outlays.

NOTE 3: SURPLUS / (DEFICIENCY) FOR THE YEAR (a) Undistributed surplus / (deficiency) transferred to reserves The undistributed surplus / (deficiency) for the year represents funds retained by the Company for future expenses / (monies disbursed by the Company for non-operating expenses) as shown in the statement of changes in equity: Transfer to Indemnity Fund reserve Payments made from reserves Transfer from Distributions Rollover

(b) Employee benefits expense Wages and salaries

10,259,420

10,906,711

Directors fees and expenses

430,061

398,392

Contributions to superannuation funds

894,756

937,845

78,321

190,621

798,712

866,228

12,461,270

13,299,797

Depreciation expenses

730,996

492,018

Amortisation expenses

639,171

414,782

1,370,167

906,800

Increase in liability for employee benefits Employment taxes and costs

(c) Depreciation and amortisation expenses

42 20

Copyright Agency

2019 $

2018 $

NOTE 4: CASH AND CASH EQUIVALENTS Cash on hand Cash at bank

Cash on deposit

–

600

1,584,321

1,763,933

1,584,321

1,764,533

44,156,029

53,534,972

44,156,029

53,534,972

5,696,983

4,011,203

5,696,983

4,011,203

805,750 24,655,398 1,805,456

531,837 14,422,748 1,805,456

27,266,604

16,760,041

Cash on deposit represents funds invested in term deposits with maturity dates ranging between 3 to 36 months. As these deposits are considered part of the Company’s investing activities these balances are not cash equivalents for the purposes of the statement of cash flows.

NOTE 5: RECEIVABLES Trade receivables

NOTE 6: OTHER ASSETS Prepayments Accrued revenue Bank security deposit

Accrued revenue represents the estimate of revenue receivable from licensees in respect of the relevant financial period but not yet invoiced as well as investment income yet to be credited.

The bank security deposit is a separate bank account containing funds set aside as security for the Company’s future office lease and other administrative commitments.

Annual Report 2018–19

43 21

44 22

Copyright Agency

2019 $

2018 $

NOTE 8: INTANGIBLE ASSETS Software At cost

2,539,665

1,983,177

(537,424)

(216,262)

2,002,241

1,766,914

Opening carrying amount

1,766,914

–

Additions

556,489

1,983,177

Amortisation expense

(321,162)

(216,262)

2,002,241

1,766,914

791,490

776,644

2,363,149

1,895,547

Cultural Fund

322,300

466,275

Lease incentive

194,805

194,806

3,671,744

3,333,272

438,312

633,117

438,312

633,117

Accumulated amortisation

(a) Reconciliations Reconciliation of the carrying amounts of intangible assets at the beginning and end of the current financial year Software

Closing carrying amount

NOTE 9: PAYABLES CURRENT Trade creditors Accrued expenses

NON-CURRENT Lease incentive

Cultural Fund Following changes to the Company’s constitution passed at the 2010 AGM, the Board has agreed to apply an amount not exceeding 1.5% (increased from 1%) of monies received by the Company during the financial year from licence and other copying fees (excluding Resale Royalty, LearningField and Screenrights) for: a. cultural or benevolent purposes in accordance with regulation 23JM (1) (d) of the Copyright Regulations and Articles 74(b)(iii) and 83(a)(iv) of the Company’s Constitution and Rules – in the case of equitable remuneration received by the Company under the Copyright Act 1968; and b. special purpose (including cultural and/or charitable purposes) in accordance with Article 73(b) of the Company’s Constitution and Rules in the case of monies received by the Company on behalf of members under its voluntary licence agreements and all other revenue.

Annual Report 2018–19

45 23

Notes to Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2019

2019 $

2018 $

NOTE 10: PROVISIONS CURRENT Employee benefits

1,147,665

1,051,843

Restructuring

100,000

160,000

1,247,665

1,211,843

266,188

282,313

266,188

282,313

25,492,221

15,315,190

25,492,221

15,315,190

15,315,190

12,462,021

127,759,254

128,588,281

(116,375,207)

(123,914,887)

410,032

–

(1,617,048)

(1,820,225)

25,492,221

15,315,190

37,957,847

40,571,287

37,957,847

40,571,287

NON CURRENT Employee benefits

NOTE 11: DISTRIBUTIONS PAYABLE CURRENT Distributions payable to members

(a) Reconciliations Reconciliation of the distribution payable to members at the beginning and end of the current financial year Distributions payable to members Opening carrying amount Distributions paid and payable Payments to members Transfer from other reserve Payments in transit and GST Closing carrying amount

NOTE 12: CONTRACT LIABILITIES CURRENT Deferred revenue arising from contracts with customers

Deferred revenue represents licence fees invoiced but applicable to future periods. Deferred revenue is transferred to the statement of comprehensive income over the relevant future period.

46 24

Copyright Agency

2019 $

2018 $

NOTE 13: EQUITY Retained earnings

–

–

Future Fund reserve

14,323,591

15,073,640

Indemnity Fund reserve

3,386,033

3,377,861

480,579

480,579

–

410,032

18,190,203

19,342,112

Amalgamation reserve Other reserve Total equity Retained earnings

Funds held as retained earnings are used for the benefit of members at the discretion of the Board. This includes funds set aside and transferred to the Future Fund and the Indemnity Fund as described below.

Future Fund Reserve In June 2013, the Board considered the issues which would arise in the event of a sudden and material decrease of revenue following a substantial change to the legislative structure or the unremunerated exceptions in the Copyright Act 1968. It was resolved that in order to safeguard and manage the rights of members including but not confined to taking such necessary actions in litigation, communications, research and advocacy, it would establish a Future Fund to provide adequate reserves to resource such activity to the extent required consistent with its prudent judgement.

In accordance with Article 74(b)(ii) of the Company’s Constitution, the Board resolved that amounts equal to the following be paid to the Future Fund, in the order as listed, until the Future Fund reached its target balance: a.

interest income received after 1 July 2013, after deduction of up to 1.5% for the Cultural Fund;

b.

after 1 July 2013, all unpaid allocations at the end of the relevant trust period of 4 years; and

c.

such other percentage of the Company’s revenue as the Board at that time considers appropriate.

The Board has undertaken to periodically review the operation of the Future Fund. In 2017, the Board reported that it had determined to maintain the Fund but that it would periodically review the need for it and any amounts no longer required for safeguarding members’ interests will be returned to members. The Board has subsequently resolved on two occasions to reduce the quantum of the Future Fund and return money to members by way of an offset against operating costs.

Indemnity Fund Reserve The Company has established an Indemnity Fund to compensate rights holders for use of their content in connection with licences managed by the Copyright Agency.

Annual Report 2018–19

47 25

Notes to Financial Statements continued FOR THE YEAR ENDED 30 JUNE 2019

2019 $

2018 $

NOTE 14: CAPITAL AND LEASING COMMITMENTS (a) Operating lease commitments Non-cancellable operating leases (in respect of leased premises and office equipment) contracted for but not capitalised in the financial statements: Payable not later than one year later than one year and not later than five years later than five years

996,769

930,630

2,467,891

3,314,909

–

–

3,464,660

4,245,539

–

600

1,584,321

1,763,933

1,584,321

1,764,533

(741,877)

113,023

1,370,167

906,800

21,686

–

(2,082,823)

(2,006,714)

1,432,846

(986,891)

(1,685,780)

1,213,945

(10,506,563)

(1,071,765)

143,667

(7,856,551)

19,697

350,623

(2,613,440)

541,574

9,767,000

2,853,168

(6,308,267)

(4,955,897)

NOTE 15: CASH FLOW INFORMATION (a) Reconciliation of cash Cash at the end of the financial year as shown in the statement of cash flows is reconciled to the related items in the statement of financial position is as follows: Cash on hand Cash at bank

(b) Reconciliation of cash flows from operating activities Surplus / (deficit) for the year Adjustments and non-cash items Depreciation and amortisation expense Loss on disposal of assets Interest received

Changes in assets and liabilities Change in trade and other receivables Change in other assets Change in trade and other payables Change in provisions Change in deferred revenue Change in distributions payable Cash flows used in operating activities

48 26

Copyright Agency

2019 $

2018 $

NOTE 16: RELATED PARTY TRANSACTIONS (a) Key management personnel compensation Compensation received by key management personnel of the Company short-term employee benefits

888,273

889,290

53,650

48,957

941,923

938,247

67,125

50,000

67,125

50,000

528,211

–

383,980

–

–

421,774

- Other advisory services

96,848

397,446

- Taxation services

26,650

5,000

1,035,689

824,220

1,102,814

874,220

post-employment benefits

(b) Transactions with other related parties Transactions with related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The only transactions with related parties during the year were distributions to Directors as copyright holders made in accordance with the constitution from declared distribution pools.

NOTE 17: AUDITORS REMUNERATION KPMG Audit and assurance services - Audit of the financial report

Other non-audit services - Request for tender services - Business transformation services - Technology related services

NOTE 18: EVENTS SUBSEQUENT TO REPORTING DATE There has been no matter or circumstance, which has arisen since 30 June 2019 that has significantly affected or may significantly affect: a. the operations, in financial years subsequent to 30 June 2019, of the Company, or b. the results of those operations, or c. the state of affairs, in financial years subsequent to 30 June 2019, of the Company.

Annual Report 2018–19

49 27

DIRECTORS' DECLARATION

The Directors of Copyright Agency Limited (the “Company”) declare that: 1. The financial statements and notes, as set out on pages 11 to 27, are in accordance with the Corporations Act 2001: and a. comply with Australian Accounting Standards-Reduced Disclosure Requirements and the Corporations Regulations 2001; and b. give a true and fair view of the financial position as at 30 June 2019 and performance for the year ended on that date.

2. In the Directors’ opinion there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Director: _________________________________ Kimberley Williams AM

Director: _________________________________ Lucrezia Russell

Dated this

50 28

20 October 2019

Copyright Agency

Independent Auditor’s Report To the members of Copyright Agency Limited Opinion We have audited the Financial Report of Copyright Agency Limited (the Company).

In our opinion, the accompanying Financial Report of the Company is in accordance with the Corporations Act 2001, including: • giving a true and fair view of the Company's financial position as at 30 June 2019 and of its financial performance for the year ended on that date; and • complying with Australian Accounting Standards - Reduced Disclosure Requirements and the Corporations Regulations 2001.

The Financial Report comprises: • Statement of financial position as at 30 June 2019 • Statement of profit or loss and other comprehensive income, Statement of changes in equity, and Statement of cash flows for the year then ended • Notes including a summary of significant accounting policies • Directors' Declaration.

Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the Financial Report section of our report.

We are independent of the Company in accordance with the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in accordance with the Code

Other Information Other Information is financial and non-financial information in Copyright Agency Limited’s annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The Directors are responsible for the Other Information.

The Other Information we obtained prior to the date of this Auditor’s Report was the Directors Report.

Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do not express an audit opinion or any form of assurance conclusion thereon.

In connection with our audit of the Financial Report, our responsibility is to read the Other Information. In doing so, we consider whether the Other Information is materially inconsistent with the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Liability limited by a scheme approved under Professional Standards Legislation.

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.

Annual Report 2018–19 Liability limited by a scheme approved under Professional Standards Legislation.

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Independent Auditor’s Report to the members of Copyright Agency Limited (continued) We are required to report if we conclude that there is a material misstatement of this Other Information, and based on the work we have performed on the Other Information that we obtained prior to the date of this Auditor’s Report we have nothing to report.

Responsibilities of the Directors for the Financial Report The Directors are responsible for: • preparing the Financial Report that gives a true and fair view in accordance with Australian Accounting Standards - Reduced Disclosure Requirements and the Corporations Act 2001 • implementing necessary internal control to enable the preparation of a Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error • assessing the Company's ability to continue as a going concern and whether the use of the going concern basis of accounting is appropriate. This includes disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the Financial Report Our objective is: • to obtain reasonable assurance about whether the Financial Report as a whole is free from material misstatement, whether due to fraud or error; and • to issue an Auditor’s Report that includes our opinion.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Australian Auditing Standards will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error. They are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the Financial Report.

A further description of our responsibilities for the audit of the Financial Report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar4.pdf.

This description forms part of our Auditor’s Report.

KPMG

Chris Allenby Partner Sydney 20 October 2019

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